Samsung shares fell 2 percent to a two-month low in morningtrade, having shed more than $10 billion since an onlineTaiwanese trade news site reported on Wednesday that Apple hadplaced large new orders with the struggling Elpida for dynamicrandom access memory (DRAM) chips used in mobile devices.

However, one industry analyst and two sources familiar withElpida's sales suggested the selloff in Samsung stock had beenoverdone, noting Elpida's current production offered limitedscope in the short term to take market share from Samsung.

One source said Elpida was already selling more than half ofits DRAM mobile chips to Apple, an estimate supported by MerrillLynch.

"Apple has been diversifying its suppliers and the deal withElpida had no major impact on other major suppliers as Elpida'sshare of the global mobile DRAM market is quite small," said thesource, who was not authorized to speak to the media.

Taiwan's DigiTimes said Apple had recently placed largemobile DRAM orders with Elpida's plant in Hiroshima, Japan. Thereport sent shares in both Samsung and rival South Koreanchipmaker SK hynix tumbling on Wednesday.

However, in contrast to Samsung's continued slide, shares inSK hynix rallied 3.3 percent on Thursday.

Lee Sun-tae, an analyst at NH Investment & Securities,agreed: "The market is overreacting to the news. Mobile DRAMaccounts for only 10 percent of Samsung's overall operatingprofit of around 26 trillion estimated for this year."

U.S.-based Micron Technology Corp is in talks toacquire Elpida's business as the Japanese firm tries torestructure after tough market conditions and global competitiondrove it into bankruptcy protection.

Apple did not response to queries on the report and Microndeclined to comment. Samsung and Elpida's court-appointedtrustees also declined to comment.

Samsung controls over 50 percent of global mobile DRAMmarket, which is set to grow rapidly due to booming smartphoneand tablet sales. SK hynix has around 22 percent, followed byElpida with around 16 percent, according to analysts.

Elpida has attracted interest from bidders mainly due to itsmobile DRAM technology. SK hynix also participated in the firstround of auction for Elpida.